Collision insurance is a kind of insurance coverage that you sign up for if you have to pay for car repairs, even if you are negligently involved in an accident. In general, this type of insurance can reduce out-of-pocket costs when something unexpected happens, but it may not work for everyone. Conflict coverage is usually optional, but in some cases it may be required.
Here’s everything you need to know about car accident insurance, including cost, coverage, and when it’s right for you.
What is collision insurance?
Collision insurance is auto insurance that compensates the insured for damage to his or her personal vehicle due to the negligence of the insured. This type of insurance is often added as a supplement to the main car policy to protect the driver in the event of collision damage.
What does collision insurance cover?
Generally, collision insurance applies when a vehicle “collides” with another object. This includes damage caused by collisions with:
- Other vehicles (parked or in motion).
- Telegraph poles.
- Trees and shrubs.
- Houses and other structures.
- Depending on your policy and where you live, collision insurance may cover the cost of repairs if you flip your car, get in a hit-and-run accident or get a porthole puncture.
If you have collision insurance or are considering it, we recommend that you always discuss your coverage with your agent. This can help you determine what applies (or doesn’t apply) in a conflict policy.
How collision insurance works.
As the name implies, collision insurance compensates the insured for damages caused by an actual collision. We do not compensate for damages caused by theft or vandalism. In addition, if the other driver is negligent, the other driver’s insurance will not compensate for damages.
What’s the difference between collision insurance and comprehensive car insurance?
Contrary to the name, comprehensive auto insurance does not cover all types of accidents, and comprehensive insurance does not include collision insurance. Instead, both types of insurance act as separate forms of insurance that help offset the costs associated with two different types of damage.
If your car collides with another, the collision usually covers you. Comprehensive insurance applies when your car is damaged by an incident or item other than a collision. Collision insurance can be repaired if you are hit by a tree, but if a large branch falls on your car, you will need comprehensive insurance that can be repaired. Comprehensive coverage also applies if damage to your vehicle is caused by natural disasters, vandalism, theft, other falls, or other causes such as contact with animals.
According to the International Insurance Association (III), comprehensive insurance tends to be less expensive than collision insurance, making it a cost-effective policy choice, especially because it covers a wide range of accidents. However, if you need comprehensive insurance or if you want a policy with stronger coverage, we recommend you consider both.
Accident Insurance Costs.
According to the National Association of Insurance Commissioners, the average annual cost of collision compensation in the United States in 2019, the most recent year for which data is available, was about $381. That figure may have a higher cost on its own because it includes discounts and generally takes into account group policies, which are cheaper than individual policies that can be purchased online.
Depending on the company, you may not be able to get collision insurance without comprehensive insurance, and vice versa. This may be because both have required active loans or leases, or because the insurer requires one to purchase the other.
Casualty insurance tends to be much more expensive than comprehensive insurance because casualty insurance is more common. Choosing a higher deductible can lower your insurance premiums as long as you can cover the cost out of your own pocket.
Who needs collision insurance?
It’s usually optional, but sometimes conflict coverage is required. It usually happens when you buy or lease a car. This is because lenders take a risk every time they make a car loan. Collision insurance helps protect your investment if your car is damaged in an accident.
However, the benefits are not limited to lenders. If you don’t have collision insurance and are involved in an accident, you can pay for repairs in addition to the balance of your auto loan. Conflict coverage helps you avoid costly scenarios. After you pay for your car, you can turn off collision coverage if that suits you.
Even if you don’t need collision coverage, getting it can still be a good idea. For example, it can be helpful if you know you can’t financially cover the cost of repairs after an accident, but you can afford the cost of collision insurance. Similarly, if repairing your car is expensive, this type of insurance coverage can protect you from many of the costs associated with an accident, as long as your cost exceeds the insurance premium deductible.